Emerging Market Economies and Financial Globalization

Leonardo E. Stanley

Description

A comparative analysis of the capital account liberalization process.

"Emerging Market Economies and Financial Globalization” offers a comparative analysis of the capital account liberalization process and the variety of policy responses generated among a reduced group of Latin American and Asian countries. In particular, the book critically examines these varied responses from a three-fold perspective: macro, micro-financial and institutional. From a macro perspective, the book compares exchange rate regimes, monetary policies and capital account liberalization paths adopted at each of the selected countries. In other words, the book analyzes how emerging economies confronted the challenge imposed by the monetary trilemma posed by Mundell. The book analyzes different corner solutions (for example, exchange rate pegging) and whether there is life inside the triangle. The Asian financial crises have certainly induced a debate on the benefits of foreign exchange reserve accumulation and the increasing policy space generated since then. But emerging countries policy-makers realized the perils of sailing in uncharted waters and, consequently, began to introduce a series of instruments to prevent sudden reversals in capital flows.

The micro-financial perspective, in turn, directs our attention to the financial sector structure, how the process of financial deepening transformed it in recent years and how local authorities responded to the increasing pressures generated by an increasingly globally connected banking sector. But cross-funding, local regulation and financial stability are certainly difficult to match, even at developed countries as the European crisis demonstrates. This triplet conforms the so-called financial trilemma introduced by Schoenmaker, and analyzed in the book—particularly observing how selected countries performed it.

Finally, the institutional perspective center on the legal treatment granted to the capital account openness process—both at the multilateral and bilateral levels. From a policy perspective the interrelationship between open macro, international financial markets and institutions has been often neglected but hardly significant with sovereigns founding periodically challenged by legal constraints. The founding fathers of Bretton Woods institutions shared a common vision: avoid large imbalances created by international capital flows. Coincidences, however, vanished after the collapse of the Bretton Woods system. Thereafter leading countries’ claims for the opening of the capital accounts and financial liberalization became common parlance. Institutionally, these pressures were present at both multilateral and bilateral fore.

Preface; Acknowledgements; Chapter 1: Introduction; Chapter 2: International capital flows and macroeconomic dilemmas; Chapter 3: Unfettered finance and the persistence of instability; Chapter 4: Financial Globalization, Institutions and Growth; Chapter 5: Argentina; Chapter 6: Brazil; Chapter 7: China; Chapter 8: India; Chapter 9: Korea; Chapter 10: Final Remarks on Financial Globalization and Local Insertion; References; Index.

Sujets

• International economics
• Comparative
• Economics
• International

Informations

• Publié par: Anthem Press
• Date de parution: 15 mars 2018
• Nombre de lectures: 0
• EAN13: 9781783086764
• Langue: English
• Poids de l'ouvrage: 1 Mo

Extrait

Emerging Market Economies and Financial Globalization
ANTHEM FRONTIERS OF GLOBAL POLITICAL ECONOMY
The Anthem Frontiers of Global Political Economy series seeks to trigger and attract new thinking in global political economy, with particular reference to the prospects of emerging markets and developing countries. Written by renowned scholars from different parts of the world, books in this series provide historical, analytical and empirical perspectives on national economic strategies and processes, the implications of global and regional economic integration, the changing nature of the development project, and the diverse global-to-local forces that drive change. Scholars featured in the series extend earlier economic insights to provide fresh interpretations that allow new understandings of contemporary economic processes.

Series Editors
Kevin Gallagher – Boston University, USA
Jayati Ghosh – Jawaharlal Nehru University, India

Editorial Board
Stephanie Blankenburg – School of Oriental and African Studies (SOAS), UK
Ha-Joon Chang – University of Cambridge, UK
Wan-Wen Chu – RCHSS, Academia Sinica, Taiwan
Alica Puyana Mutis – Facultad Latinoamericana de Ciencias Sociales (FLASCO-México), Mexico
Léonce Ndikumana – University of Massachusetts-Amherst, USA
Matías Vernengo – Bucknell University, USA
Robert Wade – London School of Economics and Political Science (LSE), UK
Yu Yongding – Chinese Academy of Social Sciences (CASS), China
Emerging Market Economies and Financial Globalization
Argentina, Brazil, China, India and South Korea
Leonardo E. Stanley
Anthem Press
An imprint of Wimbledon Publishing Company
www.anthempress.com

This edition first published in UK and USA 2018
by ANTHEM PRESS
75–76 Blackfriars Road, London SE1 8HA, UK
or PO Box 9779, London SW19 7ZG, UK
and
244 Madison Ave #116, New York, NY 10016, USA

© Leonardo E. Stanley 2018

The author asserts the moral right to be identified as the author of this work.

All rights reserved. Without limiting the rights under copyright reserved above, no part of this publication may be reproduced, stored or introduced into a retrieval system, or transmitted, in any form or by any means (electronic, mechanical, photocopying, recording or otherwise), without the prior written permission of both the copyright owner and the above publisher of this book.

British Library Cataloguing-in-Publication Data
A catalogue record for this book is available from the British Library.

Library of Congress Cataloging-in-Publication Data
Names: Stanley, Leonardo E., author.
Title: Emerging market economies and financial globalization : argentina, brazil, china, india and south korea / Leonardo E. Stanley.
Description: New York : Anthem Press, 2018. | Series: Anthem frontiers of global political economy | Includes bibliographical references and index.
Identifiers: LCCN 2018004291| ISBN 9781783086740 (hardback) | ISBN 1783086742 (hardback)
Subjects: LCSH: Finance – Developing countries – Case studies. | Capital movements – Developing countries – Case studies. | Investments, Foreign – Developing countries – Case studies. | BISAC: POLITICAL SCIENCE / Economic Conditions. | BUSINESS & ECONOMICS / Economics / Comparative. | BUSINESS & ECONOMICS / International / Economics.
Classification: LCC HG195.S83 2018 | DDC 330.9172/4–dc23
LC record available at https://lccn.loc.gov/2018004291

ISBN-13: 978-1-78308-674-0 (Hbk)
ISBN-10: 1-78308-674-2 (Hbk)

This title is also available as an e-book.
CONTENTS
List of Illustrations
Preface
Acknowledgements
Chapter One
Introduction
International Capital Flows and Macroeconomic Dilemmas
Financial Deepening and the New Microeconomic Dilemmas
A Comparative Analysis
A Final Message and a Caveat
PART 1 The Financial Globalization Journey: The General Framework
Chapter Two
International Capital Flows and Macroeconomic Dilemmas
Introduction
EMEs’ Exchange Rate Policy in an Open Macro Framework
From Fears to Market Intervention
Domestic Monetary Policy and ER Intervention: Sterilization
Capital Flows, Monetary Policy and the Global Financial Cycle
Chapter Three
Unfettered Finance and the Persistence of Instability
From Financial Repression to Global and Deregulated Markets
Financial Globalization and the Rise of Global Banks
Global Banks’ Funding Practices and Legal Status
Derivatives, OTC and Regulation: ET Is Back
The Financial Trilemma: From Deregulation to Financial Re-regulation
International Cooperation in a Historical Perspective
Chapter Four
Financial Globalization, Institutions and Growth
Introduction
Capital Controls’ Rationality
The Global Commons: Multilateral and Bilateral Perspectives
Banking Internationalization and Financial Service Deregulation under WTO–GATS
The Bilateral Push towards Financial Deregulation
The OTC Market and the US Push for ET Regulation
Exchange Rate Policies under (Renewed) Scrutiny
The Globalization Paradox and the Political Economy Perspective
PART 2 A Comparative Analysis
Chapter Five
Argentina
Introduction to Stop-Go Macroeconomics
Macro economics or Makro : From Twin Surplus to Populism
Back in Populism
Financial Markets and the Financial Trilemma
‘Living La Vida Loca ’: Argentina’s Institutional Path
Argentina and Dani Rodrik’s Political Trilemma
Chapter Six
Brazil
Macro at the Corners: Economic Policy in Stormy Waters
Playing at the Corners: How Sustainable Can a Fixed ER Scheme Be?
The End of an Affair: Inflation Targeting as a New Anchor
Brazil, the GFC and Beyond: A New Caiphirina Moment?
The Financial System and the Trilemma: New Actors, Renewed Constraints
Brazilian Capital Markets: A Brief Guide
The GFC and the Financial Market
Financial Trilemma in Brazil
Brazil: No Longer an Institutional Outsider?
Chapter Seven
China
From Mao to the GFC: The Comrades’ Macro
China, the Global Financial Crisis and RMB Internationalization
Chinese Financial Markets: A Brief History of the Chinese Banking Industry
Managing the Financial Trilemma
Institutional Development: Third World Leader Transformed into a Globalizer Champion
Institutions and China’s Commitments
Chapter Eight
India
Macroeconomics in an Open and Integrated World: Avoiding the Extremes
Avoiding the Corners: India’s Cautious Insertion into Global Financial Markets
Sailing against the Wind: India’s Performance after the GFC
Financial Markets: Avoiding Financial Instability
Financial Markets and Actors
India and the Financial Trilemma
Institutions
Chapter Nine
South Korea
Macroeconomics from Korea’s Inc to Market Liberalization
The 1997 Crisis and the Neo-liberal Response
The GFC and Korea: Economic Turmoil and Macro-Prudential Policies
Financial Market Evolution and the Financial Trilemma
Korean Financial Sector, Foreign Banks and the Financial Trilemma
Korea’s Institutionalist Path
PART 3 Final Remarks on Financial Globalization and Local Insertion
Chapter Ten
Conclusions
Economic Policy in a World of Pyramids and Triangles
What Is the Comparative Setting Telling Us?
A Short Afterword
References
Index
ILLUSTRATIONS
Boxes
2.1 FX regimes, Latin America and Asia compared
2.2 Sterilization policies in EMEs
2.3 Foreign reserves accumulation in EMEs
2.4 Foreign reserves accumulation and exchange rate manipulation
2.5 EMEs and financial globalization
3.1 Shadow banking in China
Figures
2.1 The monetary trilemma, or the ‘impossible trinity’
2.2 Trilemma index evolution for selected EMEs
3.1 Cross-border claims and liabilities by each of the analysed countries
3.2 Cross-border positions by each of the analysed countries
3.3 Schoenmaker’s financial trilemma
4.1 Measures limiting cross-border flows
4.2 Dani Rodrik’s hyper-globalization trilemma
5.1 BADLAR interest rates, private banks
5.2 Argentina’s international reserves (not seasonally adjusted)
5.3 Argentina: Real exchange rate, monthly average
6.1 Brazil, SELIC rate
7.1 Interest rate in Hong Kong and continental China
8.1 India policy rates (repo and reverse repo)
9.1 Korean WON dynamics, annual exchange rate variations against main competitors (2000–15)
Tables
2.1 Reserve ratios, examples
3.1 China’s shadow banking, composition, size and rate of growth (RMB 1 billion)
3.2 Banking regulation: main differences, binary choices
3.3 Global OTC derivative markets (amounts outstanding, in trillions of US dollars)
5.1 Argentina, basic macroeconomic indicators
6.1 Brazil IT, evolution since 1999
6.2 Brazil international reserves and basic indicators (1990–2015)
6.3 Brazil fiscal indicators (2002–15)
7.1 China’s response to the GFC
7.2 China’s onshore and offshore interest rates
7.3 Chinese banking system, ratios and performance
8.1 Compos